By: Hadley Malcolm
May 1, 2012
When senior Brode Albrecht graduates from Kimberly High School this spring, he hopes to have at least $10,000 in assets and savings to put into a retirement plan he's already started.
"I'm knowledgeable enough that I know I can handle and manage my finances," he said.
Albrecht's financial literacy is atypical of a majority of young people in the United States, who studies show are ill-prepared to cope with personal debt and a difficult job market.
Today's 20-somethings hold an average debt of about $45,000, which includes everything from cars to credit cards to student loans to mortgages, according to a PNC financial independence survey released last month. Unemployment for those ages 18 to 29 is 12.4 percent, well above the national rate of 8.2 percent. And young people face an increasingly complex global economy that is credit-driven and puts more responsibility on individuals to plan for and manage their retirement accounts.
"If we live in a world where people are in charge of their own financial well-being, we have to equip people to deal with this individual responsibility," says Annamaria Lusardi, an economics and accountancy professor and director of the financial literacy center at George Washington University.
The Treasury Department and Department of Education have teamed the past three years to assess financial literacy in U.S. high schools, and the results haven't been pretty: the average score of almost 76,900 students in 2010 was 70 percent. Last year's testing of about 84,000 students and this year's of about 80,000 students were both a point lower: 69 percent.
Though young people in America have for decades struggled with financial literacy, state curricula haven't shifted much to address the gaps. Fewer than half of states make high school students take an economics class, and just 13 require a personal finance class, according to a 2011 survey by the Council for Economic Education.
In Wisconsin, personal finance education is included in the curriculum standards and students are required to be tested on the subject, according to the Council for Economic Education. But high schools don't have to offer a course on the subject or require it for graduation.
In the Fox Valley, only nine out of 30 schools offer a personal finance course: Appleton, Chilton, Hortonville, Kimberly, Marion, St. Mary Central, Stockbridge, Winneconne and Xavier. Only five of those eight require the course for graduation, according to 2011 data from the state Department of Public Instruction.
Kimberly High School breaks the mold, offering three course options to fulfill students' financial education requirement. Principal Mike Rietveld said it's been a requirement for more than five years.
"We knew from feedback from our graduates and parents that the importance of understanding the value of a dollar is an important life skill that our kids needed," Rietveld said.
Wisconsin schools will have some help in developing personal finance education classes or programs. The Department of Public Instruction, in partnership with the Department of Financial Institutions, announced a new grant in March to support financial education initiatives. Schools, districts or teachers can apply for up to $10,000 in aid.
"We're looking for something sustainable," said DPI social studies consultant Kristen McDaniel. "We're looking for something that will provide financial education for more and more students each year."
Alan Prahl, the education manager for the Financial Information Service Center in Menasha, said he has seen an increasing number of people in their 20s struggle with the financial implications of student loans or starting a family.
The average Wisconsinite owes $7,870 in credit card debt, according to a study by the Corporation for Enterprise Development.
"I think life's big transitions are when most people face financial challenges," Prahl said. "Transitioning from living at home or at college to living on your own - there are so many major decisions that have to be made that people often underestimate the cost of living. And it can take years to recover from that debt."
FISC, in partnership with Goodwill Industries, offers financial counseling to Fox Valley residents.
The best teachers for financial stewardship are often parents, Prahl said. Teaching children to make a budget, balance a checkbook or responsibly maintain a credit card can foster vital financial literacy skills, he said.
And any financial education offered in school could drive those lessons home, Prahl said.
The methods could prove vital to educating the next generation of workers. As Council for Economic Education President Nan Morrison says, "A financially illiterate society is not an option."